• 31-JAN-2017

  • By PwC

A new ‘virtual reality’ is creating profound implications for treasury processes, technology and the profession itself

PwC’s latest global treasury benchmarking report, reveals that the success of the treasury profession is dependent on how well it operates in an increasingly virtual environment.
PwC’s report The ‘virtual reality’ of treasury captures the views of over 220 treasurers and Chief Financial Officers (CFOs) from around the world and shows that only one third of people involved in treasury processes today report directly to the treasurer. Increased outsourcing of back office and payment factory processes and more involvement with local finance teams for exposure reporting create new complexities in implementing regulations, safeguarding liquidity and managing risks. 

Commenting on the findings, Sebastian di Paola, Global Corporate Treasury Leader at PwC, says:
“Treasury’s scope continues to expand and should be seen very much as a process rather than a department. Treasury is becoming increasingly virtual and treasurers need to be jacks of all trades by collaborating more with the business, shared services and banks and raising their game in IT security, valuation and financial risk management. As a result, traditional management models may not be as effective as in the past. Instead, a consultative approach, better integration with other business processes and automation will generally be the best strategy.”

Key findings include:

The agendas of the treasurer and the CFO should be better aligned
Although the agendas of the CFO and the treasurer are aligned at a high level, CFOs are urging treasurers to take on responsibilities beyond the textbook definition of treasury, opening up opportunities for treasurers. However, treasurers do not appear to have the same sense of urgency as CFOs on topics like cybersecurity, compliance, working capital and financial risk management, as CFOs mention these 2-3 times more often as top priorities than treasurers do.

True focus on cash flow forecasting is needed
Cash flow forecasting is at the top of the treasury agenda for both CFOs and treasurers. More than 40% of the respondents mention this as a priority and 80% of these people rank it as high or of critical importance. However, there are a number of basic issues that need resolution, including accuracy of data, data mapping and proper tooling, before treasurers can truly benefit from the features that enable proper predictive and scenario analysis.

Treasurers need to take action to safeguard assets with rising cybersecurity threats
Treasury typically ‘owns’ payment infrastructures and bank communication. Both are key business functions and cannot be compromised. With cyber attacks and payment fraud regularly making headlines, treasurers must be vigilant in safeguarding financial assets. It is worrying, therefore, that only 19% of treasurers list cybersecurity as a critical concern. By contrast, 45% of CFOs name cybersecurity as a priority, pointing to a significant misalignment in CFO and treasury agendas in this regard.

Base Erosion and Profit Shifting (BEPS) will bring tax and treasury closer together
New fiscal legislation means substance and transfer pricing will take centre stage. This may have a material impact on the location of treasury activities, distribution of decision power and configuration of systems. As a result, treasury will need to work more closely with tax to assess the impact and properly prepare their organisations.

Treasurers need the means to make their activities truly resilient and effective
The treasurer’s agenda is dominated by a wide range of high-effort compliance topics such as Know Your Customer (KYC) and accounting changes. In recent years, budgets have been flat and budget outlooks remain stagnant. Many treasurers find it challenging to balance budgets with the effort required to meet compliance requirements and make treasury more effective and resilient. Attractive business cases from increasingly innovative digital solutions may provide at least a partial solution to this conundrum.

Notes to editors:

To view the report, click here or visit pwc.com/corporatetreasury

This survey was conducted between July and October 2016. The findings are based on information collected from 220 organisations that contributed responses to PwC’s Global Benchmarking Tool, a platform that allows organisations to compare their treasury strategy and operations anonymously with those of similar organisations around the world. The responses gathered this year, combined with those of prior editions of this survey, have become a comprehensive database for in-depth analysis on market trends and treasury topics.

About PwC’s Corporate Treasury network: PwC’s Global Corporate Treasury practice consists of 600 professionals working in 150 countries. Our specialists combine a variety of professional backgrounds including treasurers, bankers, system developers, accountants, integrators and management consultants.

We are proud to have received Treasury Management International’s (TMI) award for Best Global Treasury Consultant for the past 15 consecutive years. The TMI Awards for Innovation and Excellence have become the quality benchmark for the treasury profession worldwide.

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